Finance Minister Enoch Godongwana says the Medium Term Budget Policy Statement (MTBPS) prioritises reforms aimed at enhancing the growth of the Gross Domestic Product (GDP).
He was delivering the MTBPS in the National Assembly in Parliament in Cape Town on Wednesday.
“To this end, excluding interest, funding for capital projects remains the fastest-growing item by economic classification. Furthermore, we are introducing a new mechanism for improving the pace of delivery of capital projects,” he said.
The Minister was cheerful about the electricity sector’s “enormously positive transformation” due to reforms.
“We are reaping the fruits of our efforts to reform the electricity sector, including the easing of restrictions on self-generation and encouraging private investment in the area.
“At the same time, we recognise the potential loss of revenue due to private electricity generation, and the fact that traditional revenue models relied on by public entities like Eskom, face serious disruption.
“It is for these reasons that our electricity reforms are holistic, evidenced-based, and geared to find a balanced solution to our electricity supply challenges. They take into account not just a particular entity but the transformation of the sector as a whole,” he said.
According to the extended MTBPS, some of the major reforms in the energy sector comprise::
- Three projects under the Risk Mitigation Independent Power Producer Procurement Programme, with capacity totalling 150 MW, will be ready for connection to the grid in November 2023.
- By 2025, nine projects with a total capacity of over 1 000 MW will be connected to the grid under the Renewable Energy Independent Power Producer Procurement Programme, with a further 1 000 MW expected in the next phase.
- In June, Eskom released interim rules to ensure fair and transparent allocation of limited grid capacity.
- In August, Cabinet approved an amendment to the Electricity Regulation Act (2006) for public comment. The amendment aims to establish an independent transmission system operator and a competitive electricity market.
Turning to the logistics system, the Minister said the system faces significant challenges which have cost “up to 5 percent of GDP in 2022, with losses in the region of R50 billion in the minerals sector alone”.
The extended MTBPS notes that the cost of rail inefficiencies last year is estimated at R411 billion.
“Given the scale of the challenges, the National Logistics Crisis Committee was instituted to broaden reforms in the sector and prioritise reforms aimed at resolving the immediate crisis, while also addressing the structural aspects hampering the sector.
“This approach is consistent with the key lesson from our reform of the electricity sector, that resolving these challenges must be based on transforming the sector, and not trying to save an entity,” he said.
Godongwana said a “dysfunctional” Transnet – which remains at the heart of the logistics sector and the movement of goods – has serious implications for business, people’s lives, the economy and the country’s global competitiveness.
“No modern economy can thrive and grow new industries if rail lines are beset by delays, and ports are unable to efficiently handle incoming and outgoing cargo. Transnet’s performance in this regard has been underwhelming and its operations have been strained by a worsening financial state.
“Recognising the seriousness of the situation, the National Treasury is working with Transnet and the Department of Public Enterprises to ensure that Transnet can meet its immediate debt obligations,” he said.
The Minister said in this regard, a Freight Logistics roadmap will guide reforms in the sector.
“The roadmap sets out a clear path for enhancing efficiencies, facilitating the introduction of competition and leveraging the financial and technical support of the private sector.
“Only once these three objectives are reflected in Transnet’s corporate and operational plans, will there be a conversation about whether and how government can provide financial support to transform the logistics sector,” Godongwana said.
Improvements in areas such as financial management and financial governance are being prepared.
“These reforms will respond to the recommendations of the Zondo Commission, the Mpati Commission, and the Nugent Commission.
“I will…table an Omnibus Bill for public consultation, which will include key amendments to various pieces of legislation, including the Public Finance Management Act of 1999 (PFMA), Municipal Finance Management Act of 2003 (MFMA) and South African Revenue Service Act (SARS Act),” Godongwana said. – SAnews.gov.za
